LONDON: Saudi Arabia, Russia, and six other members of the so-called “Voluntary Eight” (V8) within OPEC+ are expected to approve another modest increase in oil production at their meeting today — though analysts caution that further hikes beyond September are unlikely.
The anticipated 548,000 barrels-per-day (bpd) boost would mirror August’s increase and continue a trend that began in April, when the V8 group pivoted from prioritizing price stability to regaining market share amid resilient crude prices.
The wider OPEC+ alliance — which includes 12 OPEC nations and several allies — had previously agreed to slash nearly 6 million bpd through multiple rounds of cuts in an attempt to prop up global oil prices. But rising summer demand and geopolitical tensions, particularly the recent 12-day Iran-Israel war, have kept crude prices stronger than forecast, easing pressure on the cartel.
Giovanni Staunovo of UBS noted that the latest quota hike is “largely priced in,” with Brent crude expected to hover around $70 per barrel. However, actual production gains since March have lagged behind quota increases, OPEC sources say.
Despite strong demand, ING analyst Warren Patterson believes the group is likely to “pause supply hikes after September,” warning that the market could enter a “large surplus” from October if production continues rising unchecked.
OPEC+ faces a delicate balancing act: regaining lost market share without tanking prices. “They’re walking a tightrope,” said PVM’s Tamas Varga. “Too much supply, and profits fall.”
Saudi Arabia, the group’s de facto leader, depends heavily on oil revenues to fund its Vision 2030 diversification programme, adding urgency to its decisions.
The next major test comes in November, when the group meets to discuss unwinding another 3.7 million bpd in earlier production cuts.
Analysts say forecasting OPEC+ strategy is difficult given unstable demand and global uncertainty — including geopolitical flashpoints and policy shifts under US President Donald Trump.
In late July, Trump gave Moscow a 10-day ultimatum to end the war in Ukraine, threatening new sanctions and tariffs. He has floated a 100 per cent surcharge on nations that continue buying Russian oil, with India — now Russia’s second-largest customer at 1.6 million bpd — in the crosshairs.
While such threats may impact sentiment, Staunovo noted that “OPEC+ will respond only to actual supply disruptions — not to price moves driven by risk premiums.” – AFP
